Bill Banning Imports from Xinjiang re-introduced in Senate with significant changes

On 27 January 2021, days after the United States government labelled the human rights abuses in Xinjiang as genocide, Senator Marco Rubio (R-FL) reintroduced the Uyghur Forced Labor Prevention Act. Initially introduced in March 2020, the revised legislation contains several notable changes based upon input from Senate committees and stakeholders concerned with the administrability of the original legislation. 

Noteworthy changes include additional guidance for importers, increased coordination with the private sector, clearer evidentiary standards, delayed implementation of certain prohibitions, and the disclosure requirements to the U.S. Securities and Exchange Commission (SEC) that had been included in the original draft have been removed from this version.

Please see below for additional (1) background and (2) detail on these changes.

Background

In response to reports of escalating human rights abuses in the Xinjiang Uyghur Autonomous Region (Xinjiang), Senator Rubio introduced the Uyghur Forced Labor Prevention Act (S. 3471) in March 2020. Representative Jim McGovern (D-MA) introduced the companion bill later that year (H.R. 6210). 

As discussed in a prior alert, H.R. 6210 passed the House by a vote of 406-3 on September 22, 2020. Despite the overwhelming vote, the Senate never held a vote on the legislation. Since then, Senator Rubio, has engaged in multi-stakeholder conversations, along with the relevant committees of jurisdiction to address some of the implementation issues in the previous version of the bill. These changes are reflected in the reintroduced bill. A House companion has yet to be reintroduced.

Key Changes

• New Mechanism for Public Engagement: The reintroduced legislation would require a comment process and hearing in which the public can provide input on how to best ensure that goods made with forced labor in China are not imported into the United States. Based on these processes, and 270 days after the bill’s enactment, the U.S. Department of Homeland Security, in consultation with other specified government entities, would be required to develop a strategy to prevent the importation of goods made with forced labor in Xinjiang. The strategy must be submitted to Congress in the form of a report no later than 270 days after this legislation’s enactment, and annually thereafter.
• Guidance For Importers: As part of the above-mentioned strategy, the Government would also be required to develop guidance identifying (1) best practices or effective due diligence measures to ensure the importers do not import goods made with forced labor in Xinjiang; (2) threats that could lead to the importation of these prohibited goods; (3) procedures to improve or reduce such threats; and (4) “the type, nature, and extent of evidence” that importers could provide to demonstrate detained or seized imported goods were not made with forced labor. U.S. Customs and Border Protection may issue regulations implementing the strategy’s guidance regarding best practices or effective due diligence measures to prevent the importation of goods made with forced labor in Xinjiang.
• Delayed and Amended Rebuttable Presumption: Pursuant to the original legislation, all imports of goods from Xinjiang were presumed to be made with forced labor and therefore prohibited unless the importers could provide “clear and convincing” evidence that the goods were not made with forced labor. Now, the presumption would not apply if (1) the importer complies with the above-mentioned guidance and any other regulations and has completely and substantively responded to any Government inquiries; (2) the goods were not produced wholly or in part by forced labor; or (3) the President certifies that the Chinese government is not impeding in any way attempts to investigate forced labor abuses. This presumption does not take effect until 300 days after the legislation is enacted, giving importers additional time to assess their supply chain.
• Coordination with Private Sector: No more than 90 days after the date of the bill’s enactment, the U.S. Department of State in coordination with other appropriate agencies, would be required to submit a report to Congress including a plan for working with private sector entities wanting to conduct supply chain due diligence to prevent imported goods made with forced labor. The purpose of this report is to develop a broader strategy to promote initiatives to enhance international awareness of and to address forced labor in Xinjiang.
• Elimination of SEC Disclosures: The original provision requiring extensive U.S. SEC disclosures has been entirely removed from the reintroduced version.
• Potentially Expedited Sunset: Under the original bill, the requirements and prohibitions would not sunset until the President determined that the Chinese government had ended any gross violations of human rights in Xinjiang. Pursuant to the reintroduced legislation, the provisions would cease to have effect the earlier of 8 years after enactment or the President’s determination.
• Revised Scope of Individuals and Entities Subject to Sanctions: The definition of “foreign person” is now broader, potentially subjecting a wider range of individuals and entities to U.S. sanctions. Specifically, in the original legislation, “any person in the United States” was considered a “United States person.” Now the only United States persons are (1) U.S. citizens, (2) aliens lawfully admitted for permanent residence to the United States; or (3) entities organized under U.S. laws or U.S. jurisdiction, including foreign branches of such entities. But at the same time, while the definition of “foreign person” is broader, the activities which would subject a foreign person to sanctions has been restricted. Pursuant to the original legislation, sanctions could, in part, be placed on foreign persons who “knowingly engaged in, contributed to, or provided financial, material, or technological support for” the importation of goods produced with forced labor in Xinjiang. The reintroduced legislation would only authorize sanctions on foreign persons that are “responsible for…serious human rights abuses in connection with forced labor.”

Next Steps

As discussed in previous client alerts, companies should continue to pay close attention to the status of this legislation, which will have significant implications for any imports of goods made in Xinjiang or that may contain materials from Xinjiang.

If this bill ultimately is passed and signed into law, companies will also have the opportunity to comment on implementing regulations put forward by U.S. Customs and Border Protection. Our team stands ready to help advise through this process.

More generally, companies should ensure they know their supply chain, have adequate internal controls to prevent and address forced labor in their supply chains, and consider the risk of exposure to entities in Xinjiang engaged in forced labor and other human rights abuses.

For further information or assistance, please contact any of the Hogan Lovells lawyers identified below.

Authored by Craig Lewis, Chandri Navarro, Kelly Ann Shaw, and Molly Newell.